Cloudflare Cuts Over 1,100 Workforce In AI-Driven Restructuring!

As companies continue weaving AI tools deeper into everyday operations, the conversation around automation and jobs is becoming harder to ignore. The latest example comes from Cloudflare, which says it is changing how teams work in response to rapid AI adoption, even as the company continues to post strong financial results.

 

TL;DR

 

• Cloudflare to cut 20% of workforce amid AI-driven restructuring.
• Internal AI usage at Cloudflare has surged more than sixfold.
• Shares fell 19% despite stronger-than-expected quarterly results.

Cloudflare will cut about 20% of its global workforce, affecting more than 1,100 employees, as part of a broader restructuring tied to AI-driven operations. The internet infrastructure and cybersecurity company had 5,156 full-time employees at the end of 2025.

The company expects to record charges between $140 million and $150 million related to the layoffs during the second quarter. At the same time, Cloudflare forecast second-quarter revenue between $664 million and $665 million, slightly below Wall Street expectations of $665.3 million, according to LSEG data. Adjusted earnings are expected to come in at 27 cents per share, matching analyst estimates.

Despite reporting better-than-expected first-quarter results, Cloudflare shares fell nearly 19% in extended trading. The company posted first-quarter revenue of $639.8 million, ahead of analyst expectations of $621.9 million, while adjusted profit reached 25 cents per share versus estimates of 23 cents.

Cloudflare CEO Matthew Prince and co-founder Michelle Zatlyn told employees the company was reimagining every team and function to operate in what they described as an agentic AI era.
 
Cloudflare said the layoffs were tied to redesigning workflows and internal roles rather than employee performance or short-term cost-cutting. The company also noted that its internal use of AI tools has increased more than sixfold over the past three months, leading to major operational changes across teams.

The step adds to growing concerns around the impact of AI-driven automation on jobs. Earlier this year, payments company, Block, announced plans to cut more than 4,000 jobs as it expanded AI integration across its operations.

Meanwhile, economists at Goldman Sachs previously estimated that AI-related automation contributed to between 5,000 and 10,000 monthly net job losses in the most exposed U.S. industries during 2025.